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State prepares to go live with new Medicaid computer system

CONCORD - The state is getting ready to flip the switch on a $90 million Xerox computer system to manage Medicaid that's been eight years in the making, according to Health and Human Services Commissioner Nick Toumpas.

"No one is under the illusion that we won't have problems," he told the Executive Council on Wednesday. "We have indicated that to the Legislature and I wanted you to be aware. Xerox has people lined up to field calls."

The project, which has experienced several delays and cost overruns since being launched in 2005 at an initial cost of $60 million, will link more than 10,000 Medicaid providers in a network that must ultimately be certified by the federal Center for Medicare and Medicaid Services once it's up and running.

The go-live date has been set for April 1. "That is what we've put forward as our plan," said Toumpas in a telephone interview. "It's not going to be perfect. We know that there are a number of issues we have with this. We want to make sure we have a full understanding of what those issues are."

The project has been a source of frustration for state officials, elected or appointed, since the first deadline for implementation passed in 2007. The design has been modified at least five times, with the Executive Council repeatedly voting to extend the contract after Xerox missed eight deadlines over the six-year period.

Some of the delays were due to additional features requested by the state or federal government, others were due to the vendor, Toumpas told the council. The most recent extension was approved in a 4-1 council vote on Dec. 19, which added nearly $16 million to the contract and set the April 1 completion date.

At the time, Toumpas said failure by Xerox State Healthcare to meet the newest deadline would cost the company $5.5 million.

Complicated transitions

The Medicaid Management Information System is designed to process the $80 million or so in Medicaid claims each month, paying providers and serving more than 140,000 recipients.

Electronic Data Systems, now owned by Hewlett-Packard, had managed the system for two decades prior to 2005, when the state put an upgrade out to bid. A company called Affliated Computer Services, now owned by Xerox, under-bid EDS by $10 million over the five-year period of the contract.

Hewlett-Packard, which extended its contract with the state on a short-term basis each time Xerox missed a deadline, recently told the state any extensions beyond April 1 would have to be for at least a year, thus creating even more pressure to meet the deadline.

"HP has not been asked to extend beyond April 1," said William Ritz, the HP spokesman for state health care based in Herndon, Va. "We expect to complete our final transition duties by the end of May."

All of the data from the existing system has to be transferred to the new system and all the provider connections verified. The provider enrollment has been operational since 2011.

"Providers have had more than a year to get enrolled into the system," said Toumpas, "and that part of it is largely complete. We are still working with several of them, but we know who they are and we've done extensive outreach. The data transfer is going fine and we will be working on that over the next number of days to get that accomplished."

Toumpas warned executive councilors on Wednesday to be prepared for phone calls from clients and providers.

"I want to caution you on the calls you'll get," he said, "People saying, 'The system doesn't work - it isn't processing my claims.' Providers will call you. ... We have catalogued all the known defects but we may get calls from people about a defect we haven't anticipated yet. So we have assembled a team including Xerox to respond."

Testing went well

Switching systems in such an active environment is like changing tires on a moving car. HP made its last payment to providers on March 8, and the state at some point had to stop taking claims in the legacy system, even though the new system wasn't fully up and running.

"The functionality that we want is there," said Toumpas. "We know that there are issues with any system of the scope, magnitude and complexity of this. Any system rollout of this size is not going to be perfect, one never is. But we are ready and our team has a solid understanding of the system. We're ready to do it."

The federal government pays 90 percent of the system design, development and implementation, and then 75 percent of the system cost once its operating.

When the system goes live, the federal government will reduce payment on Medicaid claims from 75 percent to 50 percent until the system is certified by the Center for Medicare and Medicaid Services, as an incentive to get certified as fast as possible.

Once the system is certified, the federal government will reimburse the state for extra dollars spent during the ramp-up. Toumpas said his department has budgeted for potential impact on cash flow.

Although the launch is likely to be a bit bumpy, Toumpas told the Executive Council that tests last month gave him cause for optimism. "We did a dry run in February," he said. "We called it Provider Plus, on Feb. 25, and it went almost flawlessly."

That was good news to councilors.

"This has been going on since '04 or '05," said District 5 Councilor Debora Pignatelli. "It's a huge contract. I'm glad to see it's going live on April Fools' Day."